The executive summary is meant to be a teaser – provide the information investors want at the absolute bare minimum level – that serves two, basic purposes. As a stand alone document it’s what you’ll typically provide to someone (or someone provides to someone else on your behalf) to gain an introduction/first meeting with a prospective investor. As a part of business plan, the executive summary is more of a primer – if an investor’s interest is peaked by your executive summary they’ll likely spend at least some time reviewing the rest of your document. However, it’s very safe to assume that if you have a poorly written/uninteresting executive summary, no investor will continue on to read through your business plan or agree to take a meeting.
This post provides a detailed breakdown of an executive summary template I have developed/refined over the last couple years and which I have used in raising multiple rounds of angel investment. Also included in the breakdown are example sections of an executive summary I created using this template. By answering the questions outlined below (and keeping the whole thing to under one page), I’m confident you will be able to create a strong executive summary.
What business are we in?
The first paragraph! There are three elements that I would encourage you to include in your answer to this question: 1) company name and the market you compete in, 2) your product name and what it does, and 3) how your product is sold. Devote no more than 1 sentence to each element of your answer. The goal with answering this question is to make sure your reader has a clear (albeit high-level) understanding of who you are, the market you play in, what your product is/does, and how you sell it. Remember, it’s all about steps – each paragraph needs to provide what the investor expects to read. Do that, and they’ll move onto the next paragraph. 
CompanyX provides hosted content services within the online applications and platforms (OAP) market via its ProductX product. ProductX is a platform for businesses and organizations to store, manage, and publish content to the web and mobile devices. ProductX services are sold at productx.com and used by our customers on a self-service basis.
What have we accomplished?
In general, investors want to see that you’ve made progress towards your goal before you ever thought about raising money. Even if you’re just getting started, it’s key to include some of your accomplishments in your executive summary. Doing so makes you real, as opposed to all those other business plans that are simply pitching “good ideas.”
The last time I answered this question I was doing it for a company that had been in the marketplace for almost two years. My answer (1 sentence per item) included 1) launch of version 1.0 of our product, 2) launch of version 2.0 of our product, and 3) a description of who was using version 2.0 (i.e., something remarkable, like a big name customer, or total number of customers) and how that provided the foundation for reaching our strategy goal (see below).
Development of ProductX 1.0 began in 2006 and was later launched in the winter of 2007. Soon thereafter we began planning for ProductX 2.0, which after almost a year of development and iteration based on customer feedback was launched in April 2009. ProductX is currently in use by over 800 organziations of all types and sizes and provides CompanyX with the necessary foundation to achieve our main objectives over the next 12 months.
Who are our customers?
What could be more important than customers? Nothing. How you answer this question is obviously going to be based on if you’re a B2B or a B2C company. My last company was a B2B company that served both large, big-name customers, and masses of small businesses. My answer to this question broke down into two parts: 1) who our customers are and 2) what they use the product for. RE who your customers are, I suggest a generic definition wtih a specific data point: i.e., “film producers, like David Lynch”. RE what they use your product for, this is simply meant to define the general market need/behavior of your customers: i.e., “our product is used by these and other types of organizations that rely on content for communications, marketing, and other core business activities”
ProductX customers include ad agencies (WPP Group), universities (MIT), large enterprises (Ernst & Young), industry associations, non-profits, film producers (David Lynch), media publishers (Meredith), government agencies (New Your Lottery), and many other types of organizations that rely on content for communications, marketing, and other core business activities.
What are we known for?
Most every venture capitalist I’ve sat down with has asked about qualifying and quantifying the value proposition – i.e. “how do you really know there is a demand for your product?”. One of the main (and as far as venture capitalists are concerned) best ways to do both those things is to go and talk to your customers/potential customers. Showing that you’ve already engaged your customers/potential customers and that you understand both why they chose your product and why they can’t live without it is pure gold and something that will make most investors sit up and start paying attention.
Our customers have told us there are there primary reasons why they chose ProductX over the competition. First is price: ProductX is the most cost effective platform on the market. Second is mobile: ProductX supports the delivery of content to all the most popular mobile devices. Third is API: ProductX offers a built-for-developers-by-developers API that enables rapid integration with 3rd party apps and services.
How big is the market?
It used to be said that a venture capitalist typically wouldn’t invest in a business that was competing in a market less than $1B in size. I’m not sure if that’s still the case, however there is absolutely something to be said for size. When answering this question I think it’s important to talk about both overall market size and segment growth. Saying your business is about to dive into some $1B+ market is great, however you should also have a very firm understanding of how that market is broken up: know which areas your business competes in and how those pieces are performing in relation to each other. I think it’s best to include both of these items in your answer to this question and to cite where your information is coming from. Market research/analyst data (e.g., what you’d get from Forrester, IDG, Gartner, etc.) costs money, however having a strong source will help to prevent any potential investor pushing back on you in a meeting/presentation.
According to a Forrester Research report published earlier this year, online applications and platforms (OAPs) generated revenues of $4.1B in 2008, up 86% over 2007, and are expected to generate roughly $5.9B in 2010. That same report also predicts that OAPs focused on mobile content delivery and 3rd party integrations will increase their market share from 13.4% in 2008 to over 22% by 2010.
What’s our strategy goal?
You’re going out to raise money because you want to do something. The strategy goal is that thing and includes three components: 1) where you’re going, 2) when you’re going to get there, and 3) how you’re going to get there. It’s important to be very clear when it comes to defining your strategy goal – this really is the heart of why an investor would put their money into your company. Where you are going is simply whatever your goal is: become a market leader, grow revenues to X, increase customers by Y, etc. When your going to get there is the date (quarter is fine) you believe you’ll achieve that goal. How you’re going to get there references the work you’ve already done to put your startup in a position to effectively use the money and investor is going to give you.
Our goal is to establish ProductX as the leading SMB-focused online platform by Q4 2010. We plan to do this by growing new signups and customers, and maintaining our lead in product innovation and cost effectiveness.
How much do we need to get there?
I usually like to answer this question in two pieces: 1) statement of how much we’ve already raised and 2) how much we’re looking to raise to achieve our strategy goal. General rule of thumb whenever you’re talking about money you’ve raised and/or are looking to raise: never include the valuation. Even if you have a particular valuation in mind, it’s important to only discuss it in conversation. Regardless if you’re able to raise the money at your target valuation, angels and venture capitalists do not like to be dictated to. Including a valuation in any document other than your term sheet has the chance of turning an investor off before you have even had time to discuss it.
To date we have raised roughly $4M in Seed and Series A financing from a small group of professional angel investors. We are seeking to raise $3M in Series B financing to achieve our objectives over the next 12 months.
What’s the story of your company?
In my experience, angels and venture capitalists view the story of a company and the people behind it very differently. Angels, being early stage investors, are less likely to turn down a great looking startup just because the team isn’t stacked with superstar tech veterans. Venture capitalists, because they are later stage investors, often weigh the team heavily in their overall view of a business.
Depending on the stage of your company, the history of your team, and who you’re trying to raise money from, you might consider moving this section to the top. In any case, rather than try and jam a lot of info about your team into the executive summary (I know it’s tempting), I think it’s best to link to their full bios on your website.
Internet entrepreneur and CompanyX CEO Bob B. founded the company in the winter of 2005 with a vision for how the Internet was going to greatly enhance the role of content as a communications and marketing tool. From it’s inception, the CompanyX leadership team has included CTO John D., SVP Marketing Jane T., and a development staff of four. All members of the CompanyX leadership team attended Massachusetts Institute of Technology.
Parting thoughts…
As discussed, good executive summaries are concise, not verbose. If you’re not a totally brand new company, chances are there is (or should be ) a lot of information on your website that can help to bolster the items you’ve included in your executive summary. In general, I usually include the following links in my executive summary: your product home page, list of customers/case studies, aspects of your product/business that you’re most known for, and your leadership team bios.
Also, think about including the questions. In the last executive summary I prepared, I included all of the questions listed above except for “What business are we in?”. Including these questions will both help you write a concise executive summary and (importantly) pre-define the questions your answering for a potential investor.
I hope you find this information helpful. Although I’m sure there will be many future adjustments/iterations, this template has served me well over the past few years and I’m confident it’ll do the same for you. Please feel free to leave any comments or shoot us a tweet @roachpost if you have questions or would like to discuss any items included in this post.
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